Based on Yao Qian’s stance on the integration of China’s DCEP and Ether world, and V God’s planning and confidence in Layer2 and Ether 2.0, Mars Investment Research believes that we are heading towards a new, diversified and prosperous crypto economy ecology, and the opportunity of value investment beckons us.
However, from the investors’ investment attitudes towards these two projects, we are disappointed to find that the market does not have a user base for value investment, and we can even therefore understand the difficulty of the Chinese government, think tanks and the central media in making difficult decisions on governance decisions and propaganda attitudes – they have to actively embrace blockchain technology and respond to the opportunities and challenges brought by cryptocurrencies, while also taking into account the financial order and even social instability caused by speculative lightning storms and crowdfunding scams.
Vega’s Ice and Fire
Lending is the most important cornerstone of the DeFi ecosystem, but it is derivatives that have the most valuable space in the DeFi ecosystem. Decentralized derivatives protocols enrich the structure of the underlying financial products in the DeFi world, and based on these protocols, more standardized investment and financial products are constantly being introduced to meet the ever-changing investment needs of users.
However, the derivatives market is just getting started. Regardless of performance over the past 24 months, the growth in lending dominated by Aave and Compound has increased the total value of locked collateral from $100 million to more than $15 billion, which is far greater than the growth in the derivatives market; in contrast to the traditional capital markets derivatives market, in the traditional financial world, derivatives are traded in higher volumes than the spot market In the FX market, for example, derivatives turnover is three times higher than spot, but cryptocurrency derivatives trading volume is still less than half of the spot market; in the spot market, decentralized exchanges are performing spectacularly, such as Uniswap, Sushiswap and Curve, which are driven by AMM, yet in the derivatives space, decentralized exchanges are still in the exploration phase.
Early-stage projects face opportunities as well as challenges.
- The order book model is time-consuming and laborious. At present, Ether Layer 1 is not enough to support the order book model, and there are some well-known protocols developed directly based on Layer 2 (such as dYdX) or built directly on the application layer dedicated blockchain, such as dTrade (based on Polkadot) and Vega Protocol (based on Tendermint). These products value development and require more time between innovative ideas and readiness to enter the market.
- The AMM model still needs to be optimized. For AMM, although we have found many experimental products and interesting model design, for the current design still needs a lot of trial and error and continuous product iteration. For example, DEX Perpetual Protocol, the most out-of-the-loop AMM derivative, experienced a plunge in the market on April 18, with the price of the Ether perpetual contract at $900. However, no other similar DEX on the price is below $2000.
- Derivatives are complex in design. Derivatives trading is more challenging than the spot market, requiring subtle design of risk control, margin trading, clearing mechanism, price prediction machine mechanism, etc. Therefore, it will take more time to develop a complete derivatives trading model.
Below we introduce Vega, a proof-of-interest blockchain built on Tendermint that allows trading derivatives on a decentralized network with similar experience to centralized exchanges.Vega’s mission is to develop a software that gives everyone fair access to high-quality derivatives markets. Vega was designed to enable all participants to benefit equally from competitive fees, with returns proportional to the value added.
- Atomic Margin Calculation: The Vega trading engine uses an industry standard risk model that optimizes the market’s margin requirements based on expected market volatility and open positions. Each time a new block is created, the network recalculates margin levels to ensure that traders receive the most competitive leverage without compromising the safety of the market.
- Built-in liquidity incentives: Vega implements a novel liquidity mining mechanism where liquidity providers (LPs) set the transaction fees for each market by bidding. This results in lower fees in highly competitive markets and fully incentivizes liquidity in new markets with low trading volumes.
- Low latency and high throughput: The Vega blockchain is optimized for the design. It runs with a blocking time of about one second and is capable of processing thousands of transactions per second. There are no fees to create, cancel or modify orders. Instead, traders pay fees only when their order matches both sides of the transaction, or for example to make deposits and withdrawals from the Etherbridge smart contract.
- Protected auctions and price monitoring: The Vega network has built-in triggers to ensure that trades are conducted within safe limits. For highly leveraged counterparties, large price movements may result in insufficient margin to cover their open positions. The network implements price monitoring and triggers auctions in the event of false price movements to protect market participants from the risk of losses due to manipulation or black swan events.
- Permissionless market creation: The Vega network enables users to propose, modify and approve markets for any asset they wish to trade with each other without seeking permission. By aligning the interests of liquidity providers, traders and token holders, Vega will be able to quickly create new markets and unlock a wealth of new opportunities on the decentralized network.
- Anonymous trading and governance: Trading and governance on Vega is executed by anonymous users. Traders do not need to know each other’s identities to trade together in a secure environment. Proven incentives and strong protocol governance ensure that the marketplace serves the best interests of all traders equally at all times.
- Rich and user-friendly API: The network exposes market data and trading privileges through a modern, user-friendly API. Markets can be accessed via REST, RPC and GraphQL. Developers can build complex real-time applications using HTTP to establish synchronous interactions or utilize streaming via web sockets.
Vega’s founding team and the design of this product set were deeply appreciated by professional investment institutions, and Vega’s seed round raised a total of $5.5 million in 2019, led by Pantera Capital, with participation from KR1, Ripple’s Xpring, Rockaway, Eden Block, and others; in November 2020 In November, Vega raised $5.5 million in funding from VC institutions and traditional trading platforms with strategic backers including Arrington Capital, Coinbase Ventures and Cumberland DRW.
However, during the crowdfunding phase, mass investors were lukewarm due in part to market sentiment factors. The pessimism of doubt, harvesting, and breakage permeated the Coinlist Chinese #04 [Vega] community.
In stark contrast, AIR aircoin was issued to mock the madness of the cryptocurrency market, yet it was hugely sought after by the market.
After buying AIR aircoin, there is nothing but air. This is an aircoin project whose name is Aircoin. The project initiator probably just wanted to make a joke, but it was obvious that the community players took it seriously. The number of users holding the coin quickly exceeded 20,000 in a few days, and the number of users in the community at home and abroad quickly exceeded 30,000, and the number of effective addresses holding the coin continued to grow at a rate of over 30%.
This is just a kind of irrational community activity brought by inadvertence; as for the layout of “masters” who use blockchain and cryptocurrency concepts for fraud, and the gambler’s wealth temptation of ten times or even higher leverage contracts, it is difficult for the public investors to hold themselves.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-paradox-of-value-investing-from-the-deviation-of-vega-and-air-aircoin/
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